Which of the Following Statements Is True About Net Worth

question 96

Multiple Choice

Which of the following statements is true about net worth?

• A) A firm's net worth should be higher than the stockholders' equity.
• B) A firm's net worth should be equal to 50 percent of the value of the total assets of the firm.
• C) A firm's net worth is equal to total assets minus total liabilities.
• D) On liquidation of a firm, the common stockholders' will receive the exact amount shown in the equity section of the balance sheet.
• E) The net worth of a firm is the amount to be paid by the shareholders to the firm on liquidation of the firm.

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Definitions:

Birthrates

The number of live births per thousand of the population in a given period, used as an indicator of population growth.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are traded in a free market.

Interest

The charge for borrowing money or the return on investment in savings accounts or bonds, typically expressed as a percentage.